The land of mortgages is big, and Ryan Boughen, a multi-award-winning Regina Mortgage broker with TMG The Mortgage Group, understands how confusing it can be with new rules, rates and information appearing regularly in the market. There are also dozens of lenders with thousands of mortgage products available. Ryan Boughen is a Trusted Regina Mortgage Broker, and in his latest mortgage tip, he touches on the subject of mortgage renewal.
Your mortgage is probably the single most considerable expense. Unfortunately, most people give it little thought. Here are the most expensive mistakes you must avoid when you renew your next mortgage.
✅ Don't take the first offer - Most times, the first offer you receive from a bank or lender is never their best. Don't be afraid to shop around.
✅ Refinancing - Many mortgage brokers and lenders will bring up the opportunity to refinance your debt or take out equity from your home at the time of mortgage renewal. For more than 99% of us, this is a bad idea. The lure of “cheap money” is strong – whether to pay off debts or use the money for a home reno – going into more debt when you renew your mortgage will cost you in the long run.
✅ Paying off Debt Responsibly - If you have car loans, lines of credit, a balance on your credit card, or other personal debts, you should never pay more than the minimum on your mortgage. Paying off these debts, saving for your child’s education and putting away 15% of your gross income into retirement ALWAYS takes priority over paying off your house.
✅ Have A Master Plan for your Finances - If you fail to plan, plan to fail. Ideally, you should have a monthly, yearly and 5-year plan for your overall finances. Anything from planning your monthly expenses, such as budgeting housing, automotive, and general expenses, to the amount you want to see in your RRSPs and retirement fund.
What is an Employment Letter and Why Lenders Require One?
Obtaining a mortgage takes a lot of planning and patience to ensure things go smoothly throughout the entire transaction. Preparing documents early on in the process will reduce your stress in purchasing a new home, or renewing or refinancing your current mortgage. Obtaining an employment letter early on is particularly important for individuals with a job tenure of less than two years, if you have had a temporary promotion, or work on an hourly basis. This will ensure there are no surprises later on.
What is an employment letter?
Your employment letter (aka job letter) is written by your employer to verify your position within the company, tenure, and income. This is a very important component of qualifying for a mortgage.
What should your letter include?
Your employment letter should be written on company letterhead and should include: your position within the company, tenure, salary/wage (along with bonus info if applicable), hours guaranteed per week (if applicable), and be signed by the individual issuing it, along with their job title and daytime contact phone number.
Why do lenders require an employment letter?
Lenders require your job letter to verify employment as well as to have a contact number on file for any questions regarding your employment.
How do I get my employment letter?
Employment letters can be obtained through a simple request made to your employer, they generally will have a template on hand so it will take very little time to complete.
Wishing you had more money for renovations or another expense? Here is how you can use home equity to your advantage:
Many people find that one of the easiest and most affordable ways to access money is through the equity that they have accumulated in their home. This is a very popular option, especially when you have an excellent first mortgage in place.
Using home equity to your advantage
Canadians purchase homes for a variety of reasons. Some want the stability of owning their own home, while others also look at home ownership as an investment vehicle. No matter what the reason, the truth is that home ownership has proven itself to be a good stable investment over time, and one which many Canadians are profiting from.
While many people have chosen to purchase their first home during these times of lower interest rates, there has also been a large movement to refinance home loans and pull out equity for home improvements, investments, college expenses, and even high interest debt consolidation. Canadians have been borrowing against their home's equity in record numbers, taking out billions of dollars in cash each year.
In years past, many saw their homes as a shelter of safety, yet today, they are more than ever before, willing to borrow against the equity owned in their homes to further their investment portfolios, get out of debt, send their children to university, make improvements to their home, or even boost their RRSP contributions. Where home equity was once sat upon, today it is often used to one's advantage.
While removing equity from your home can be a good idea, you should do so with caution and fully understand the benefits and possible risks. The best thing you can do is to consult a licensed mortgage professional and financial planner to discuss opportunities to make your home's equity work for you.